Professor Bainbridge suggests that the timing of the Goldman suit may be suspicious, but not in the way that Republicans have claimed. From the Wall Street Journal:
Last Friday, the same day that the government unexpectedly announced its Goldman lawsuit, the SEC’s inspector general released his exhaustive, 151-page report on the agency’s failure to investigate alleged fraudster R. Allen Stanford. Mr. Stanford was indicted last June for operating a Ponzi scheme that bilked investors out of $8 billion. He has pleaded not guilty.
Guess which of these two stories was pushed to the back pages? The SEC did its part by publishing the Stanford report so deep in its Web site that more than a few of our readers had trouble finding it. Yesterday, the SEC management’s response to the report was available on the agency’s homepage, yet it provided no links to the report itself.
Little wonder. The report is damning for an SEC that wants the public to believe it has turned the corner after the Bernie Madoff disaster. The commission has made young Fabrice Tourre of Goldman Sachs a household name for his debatable disclosures to institutional investors. But many individual investors will be more interested in learning the story of Spencer Barasch. He’s the SEC enforcement official who sat on various referrals to investigate Allen Stanford and then, after leaving the SEC, performed legal work for . . . Allen Stanford.
In one part of Pellegrini’s testimony, a government official asked him: “Did you tell (Schwartz) that you were interested in taking a short position in Abacus?”
“Yes, that was the purpose of the meeting,” Pellegrini responded.
“How did you explain that to her?” the government official said.
“That we wanted to buy protection on traunches of a synthetic RMBS portfolio.” Pellegrini said.
